Flagstar named Lee Smith, its president of mortgage, as its next CFO, effective Dec. 27, the bank said Friday.
Smith will replace Craig Gifford, the former U.S. Bank executive whom Flagstar brought aboard in April – a month after investors led by former Treasury Secretary Steven Mnuchin infused the troubled bank with $1.05 billion in capital in exchange for several leadership changes.
Gifford will “step down to reengage in personal endeavors outside the banking industry” but will stay with Flagstar through March 31 to ensure “a seamless handover,” the bank said.
Joseph Otting, the former comptroller of the currency whom investors installed as Flagstar’s CEO this year, called Smith “an instrumental member” of the bank’s executive team and cited his “deep knowledge of the Company.”
Smith joined Flagstar in 2013 as chief operating officer, according to his LinkedIn profile, and moved to the mortgage division in 2020, ahead of the 2022 acquisition that combined the then-Michigan-based lender with New York Community Bank.
NYCB, however, spiraled in January, when it disclosed a surprise $252 million loss over its exposure to commercial real estate. The bank’s stock lost 84% of its value in the following weeks, and its CEO resigned after NYCB took a $2.4 billion impairment charge.
The bank rebuilt its executive stable under Otting and rebranded under the Flagstar name, but the lender’s growth trajectory – particularly, its acquisition of assets from the collapsed Signature Bank just months after integrating with Flagstar – drew scrutiny from lawmakers.
Sen. Elizabeth Warren, D-MA, accused the Office of the Comptroller of the Currency of being “asleep at the wheel” for approving the Flagstar-NYCB tie-up when the Federal Deposit Insurance Corp. would not – then castigated the FDIC for signing off on the Signature deal, which propelled NYCB past the $100 billion-asset threshold that required tighter regulation.
Flagstar has recovered some of its value on the year but still trades at about one-third what it did on Jan. 30, the day before it disclosed its CRE losses.
“As all of our stakeholders know, we have been working relentlessly to elevate Flagstar to new heights,” Otting said in a statement Friday. “Given the substantial progress we've made as a Company, I am comfortable that this is a good time for this transition, and I am confident the momentum we've gained will only strengthen as we move forward."
Flagstar, separately Friday, appointed Brian Callanan, general counsel for Liberty Strategic Capital, to its board of directors. Liberty is the Mnuchin-led lead investor in Flagstar’s turnaround. Callanan’s appointment represents a second seat for Liberty on Flagstar’s board, fulfilling one of the conditions of the March capital infusion.
Otting on Friday also expressed “sincere appreciation” for Gifford, the outgoing CFO, “for his impactful contributions over the past year.”
“His leadership during this time has been invaluable, and we wish him all the best,” Otting said.
Like Gifford, Otting is a U.S. Bank alum, having served as head of the Minneapolis-based lender’s commercial banking group until 2010. Gifford joined U.S. Bank in 2008 as corporate controller, according to his LinkedIn profile.
